EMISSIONS: EU Mid-Day Carbon Summary: Carbon Fall On EU Gas Losses
EUAs/UKAs Dec25 are trending lower, weighed by losses in EU gas, with TTF declining as net injections into European storage holding above normal. EUAs have also retreated from overbought territory reached yesterday, marking the second occurrence in the past year. The previous pullback from overbought level in January 2025 saw prices drop by as much as 20% over the following two months.
- EUA DEC 25 down 1.13% at 76.3 EUR/t CO2e
- UKA DEC 25 down 0.32% at 56.92 GBP/t CO2e
- TTF Gas OCT 25 down 2.2% at 32.325 EUR/MWh
- NBP Gas OCT 25 down 2.3% at 79.12 GBp/therm
- Estoxx 50 up 0% at 5363.36
- FTSE 100 SEP 25 up 0.1% at 9257.5
- The latest EU ETS CAP3 auction cleared at €76.4/ton CO2e, up 1.58% compared with the previous EU auction at €75.21/ton CO2e according to EEX.
- The EU was among the few major economies to reduce GHG emissions in 2024, down 1.8% compared to the previous year, equivalent to a 60mn tonnes CO2e cut, according to the latest EDGAR report.
- TTF front month has fallen from a high of €33.35/MWh, with net injections into European storage holding above normal despite Norwegian seasonal maintenance. The market is meanwhile weighing the risk of increased sanctions on Russia, as China ramps up purchases of sanctioned Russian LNG.
- French Prime Minister François Bayrou’s resignation after losing confidence vote may weigh on carbon prices, as ongoing political turmoil leaves France’s fiscal challenges unresolved and shortens the window to strike a budget deal.
- Norwegian PM Jonas Gahr Store has secured a second term in office following yesterday's election, which this outcome is in line with the most likely scenario outlined in MNI's preview.
- Following the election, Labour will have to govern either as a minority or coalition government (the former is common in Norwegian politics). The first order of business for Store is to get support for the 2026 budget later this year.
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AUSSIE 10-YEAR TECHS: (U5) Recovers With Treasuries
- RES 3: 96.501 - 76.4% of the Mar 14 - Nov 1 ‘23 bear leg
- RES 2: 96.207 - 61.8% of the Mar 14 - Nov 1 ‘23 bear leg
- RES 1: 95.960 - High Apr 7
- PRICE: 95.710 @ 14:34 BST Aug 8
- SUP 1: 95.415/95.300 - Low May 15 / Low Jan 14
- SUP 2: 95.275 - Low Nov 14 (cont) and a key support
- SUP 3: 94.707 - 1.0% 10-dma envelope
Aussie 10-yr futures received a boost from the US Treasury rally that followed a poor NFP print. This keeps Aussie 10-year futures toward the top end of the recent range. To the upside, next resistance is at 96.207, a Fibonacci retracement point. Next support undercuts at 95.420 (pierced), the Feb 13 low, ahead of 95.275, the Nov 14 low and a key support. Clearance of this level would strengthen a bearish condition.
SECURITY: Trump To Sign Trilateral Peace Accord With Armenia/Azerbaijan Shortly
US President Donald Trump is shortly due to sign a trilateral peace agreement with Armenian Prime Minister Nikol Pashinyan and Azerbaijani President Ilham Aliyev at the White House. LIVESTREAM The event will provide another opportunity for Trump to style himself as peacemaker, after touting success in brokering peace deals between Rwanda/Congo, Cambodia/Thailand, and India/Pakistan.
- The accord aims to resolve a decade-long dispute over the sovereignty of Nagorno-Karabakh - a breakaway Azerbaijani province that was under de facto Armenian control from the dissolution of the Soviet Union until a 2020 war.
- Trump described the meeting on Truth Social as a “historic peace summit,” noting that the US will also sign “Bilateral Agreements [to] fully unlock the potential of the South Caucasus Region.”
- White House spokeswoman Anna Kelly told reporters that Trump would sign deals with both Armenia and Azerbaijan on energy, technology, economic cooperation, border security, infrastructure and trade.
- A White House official said: "It's about the entire region, and [the leaders] know that that region is known to be safer and more prosperous with President Trump."
- Reuters reports that the US will have development rights to build transportation links in the strategic Zangezur Corridor, a mountainous stretch of Armenian territory between Azerbaijan and its Nakhichevan exclave.
- Politico notes: “But whether this is just a photo opportunity or a lasting end to a conflict that has undermined stability in a region dominated by Russia and Iran will depend on whether the US can address several key challenges.”
FED: Balance Sheet Runoff Continues At Steady $20B/Month Pace (2/2)
Fed asset holdings were little changed in the past week. SOMA runoff totaled $2.8B (composed of $4.2B less nominal Tsy holdings and $1.4B more TIPS), with emergency lending/liquidity facilities $0.7B lower.
- Over the last 4 weeks, the $20B/monthly expected QT pace was roughly adhered to: MBS fell $18B, with Treasury net holdings down around $2B (a fall in TIPS holdings offsetting a slight rise in nominals).
- Discount window usage accounted for the fall in lending facility usage this week; takeup is now down to $4.9B, down $1.3B in the last month and down from the 1-year high of $6.4B set in July which looks to have been a temporary blip higher.
